Consolidated Profit after Tax for the year ended March 31, 2017 at Rs 11,051 crore

The Board of Directors of Housing Development Finance Corporation Limited (HDFC) approved the standalone and consolidated audited financial results of the Corporation for the year ended March 31, 2017 at its meeting held on Thursday, May 4, 2017 in Mumbai.

STANDALONE FINANCIAL RESULTS

Financials for the quarter ended March 31, 2017

The profit numbers for the quarter ended March 31, 2017 are not comparable.

The reported profit before tax for the quarter ended March 31, 2017 stood at Rs 2,938 crore compared to Rs 3,642 crore in the corresponding quarter of the previous year.

In the quarter ended March 31, 2016, the Corporation sold shares of HDFC Standard Life Insurance Company Limited (HDFC Life) for a consideration of Rs 1,513 crore and had also created a one-time special provision of Rs 450 crore as a charge to the statement of profit and loss.

After considering the above-mentioned one-time transaction, the adjusted profit before tax for the quarter ended March 31, 2016 stood at Rs 2,579 crore. The profit before tax for the quarter ended March 31, 2017 stood at Rs 2,938 crore, representing a growth of 14% over the corresponding quarter of the previous year.

For the quarter ended March 31, 2017, the reported profit after tax stood at Rs 2,044 crore as compared to Rs 2,607 crore in the corresponding quarter of the previous year.

Financials for the year ended March 31, 2017

The profit numbers for the financial year ended March 31, 2017 are not comparable with the previous year, owing to profit on sale of investments and consequent voluntary, additional provisioning made.

The reported profit before tax for the year ended March 31, 2017 stood at Rs 10,727 crore compared to Rs 10,108 crore in the previous year and the reported profit after tax stood at Rs 7,443 crore compared to Rs 7,093 crore in the previous year, representing a growth of 5%.

During the first quarter of the financial year ended March 31, 2017, the Corporation sold equity shares of HDFC Ergo General Insurance Company Limited for a consideration of Rs 922 crore. Consequently, the Corporation had created a special provision of Rs 275 crore as a charge to the statement of profit and loss. After adjusting for this and for the sale of HDFC Life as referred to above, the adjusted profit before tax for the year ended March 31, 2017 stood at Rs 10,080crore as compared to Rs 9,045 crore in the previous year, representing a growth of 11%.

DIVIDEND

In March 2017, the Board of Directors declared and paid an interim dividend of Rs 3 per equity share of Rs 2 per share.

The Board of Directors recommends payment of final dividend for the year ended March 31, 2017 of Rs 15 per equity share of Rs 2 per share compared to Rs 14 per equity share for the previous year.

The total dividend for the year is Rs 18 per equity share as against Rs 17 per equity share for the previous year.

LENDING OPERATIONS

Growth in individual disbursements was robust in the first-half of the financial year. While the impact of demonetisation was transitory, it did result in subdued disbursement growth, particularly in the third quarter and part of the fourth quarter of the financial year under review. By the end of the financial year, the individual disbursement growth trajectory began normalising.

The Corporation has cumulatively financed 5.8 million housing units. The average size of individual loans stood at Rs 25.6 lac as against Rs 25 lac in the previous year.

The non-individual business saw a pick-up in growth during the second half of the year, largely led by increased demand in commercial lease rental discounting.

On an Assets under Management (AUM) basis, the growth in the individual loan book was 16% and the non-individual loan book was 17%. The growth in the total loan book was 16%.

Of the total loans, individual loans comprise 73%. During the year, 71% of the incremental growth in the loan book came from individual loans.

As at March 31, 2017, the loan book stood at Rs 2,96,472crore as against Rs 2,59,224 crore in the previous year.

During the year, the Corporation sold individual loans amounting to Rs 16,027 crore compared to Rs 12,773 crore in the previous year.

As at March 31, 2017, total individual loans outstanding in respect of loans assigned/securitised stood at Rs 41,296 crore. HDFC continues to service these loans and is entitled to the residual income on the loans sold. The residual income on the individual loans sold is 1.24% per annum and is being accounted for over the life of the loans and not on an upfront basis.

The growth in the individual loan book, after adding back loans sold in the preceding 12 months was 23% (14% net of loans sold). The non-individual loan book grew at 17%. The growth in the total loan book after adding back loans sold was 21% (14% net of loans sold).

Asset Quality

Gross non-performing loans as at March 31, 2017 amounted to Rs 2,378 crore. This is equivalent to 0.79% of the loan portfolio. The non-performing loans of the individual portfolio stood at 0.61% while that of the non-individual portfolio stood at 1.16%.

As per National Housing Bank norms, the Corporation is required to carry a total provision of Rs 2,396 crore of which Rs 1,605 crore is against standard assets.

The provisions as at March 31, 2017 stood at Rs 3,067 crore of which Rs 738 crore is on account of non-performing loans. This provision is equivalent to 1.02% of the loan portfolio.

Spread and Net Interest Margin

The spread on loans over the cost of borrowings for the year ended March 31, 2017 stood at 2.33% compared to 2.29% in the previous year. The spread on individual loans was 1.99% and on the non-individual loans was 3.09%.

Net Interest Margin for the year ended March 31, 2017 was 4.1% which was the same as in the previous year.

INVESTMENTS

As at March 31, 2017, the unrealised gains on HDFC’s listed investments amounted to Rs 81,514 crore (previous year Rs 57,651 crore). This excludes the appreciation in the value of the unlisted investments.

COST INCOME RATIO

For the year ended March 31, 2017, the cost to income ratio stood at 7.4% compared to 7.6% in the previous year.

CONSOLIDATED FINANCIAL RESULTS

For the year ended March 31, 2017, the consolidated profit after tax stood at Rs 11,051 crore as compared to Rs 10,190 crore in the previous year, representing a growth of 8%.

As mentioned above, the profit for the year ended March 31, 2017 is not comparable with the previous year due to the sale of investments as referred to earlier.

The share of profit from subsidiary and associate companies in the consolidated profit after tax was 33% for the year ended March 31, 2017.

DISTRIBUTION NETWORK

HDFC’s distribution network spans 427 outlets which include 130 offices of HDFC’s distribution company, HDFC Sales Private Limited (HSPL). HDFC also covers additional locations through its outreach programmes. Distribution channels form an integral part of the distribution network with home loans being distributed through HSPL, HDFC Bank Limited and third party direct selling associates.

To cater to non-resident Indians, HDFC has representative offices in London, Dubai and Singapore and service associates in Kuwait, Oman, Qatar, Abu Dhabi and Saudi Arabia.